Retirement planning for 30 year old IT Employee

May 30, 2019

I am currently 30 year old and plan to invest 20,000 on a monthly basis for around 20-25 years. My goal is to have a saving of around 1.5-2 cr towards the end of the retirement i.e at the age of 60. What would be an ideal portfolio for me considering I’m open to even invest in stocks. Also I feel having term insurance is better than traditional Insurance policies, please suggest?

2 Answers
Jun 8, 2019

Retirement planning should be one of the most important goals of everyone’s life. But unfortunately, in India, we postpone provisioning for the same, for the sake of other goals. Still, Child education and their Marriage planning are on the top of the list of individual’s goals. We sideline retirement planning for many years.

Gone are the days when our parents were getting regular monthly pensions from the government. Nowadays most of the people are from private jobs or running their own business. In today’s world when private jobs are not secured there is no question of pension from the employer. And that's made retirement planning more crucial. Provision for this goal should start from your first pay cheque itself. If you start contributing early for this purpose you can build sizable amount in your retirement kitty.

Good to know that you are thinking of Retirement goal with systematic investment for the long term.

Let's see how much can you accumulate as your Retirement corpus.

Scenario 1

  • A monthly investment of 20k
  • Investment in good quality Equity Mutual fund, PPF and EPF
  • Tenure - for 25 years
  • Portfolio rate of Return - 10.% (SIP investment returns in equity assumed 11 % and debt returns 8% year-on-year.)

retirement planning scenario

So at the end of 25 years, you can accumulate 2.65Cr

But will this amount be sufficient after 25 years with the rising inflation.?No its not

Scenario 2

But if you do Step Up SIP with an annual increase of 5% every year in monthly SIP amount you can accumulate whopping 4 Cr.

retirement planning scenario 2

A whopping difference of ~ 2Cr in accumulation if you use Step up SIP for your retirement goal.

Different asset class for retirement planning

Where to invest this 20000 Rs?

Debt Options

  • PPF
  • EPF(for salaried employee)
  • Debt funds

Equity options

  • Equity Mutual funds
  • ELSS
  • NPS

Real Estate

  • Preferably Commercial Property

My suggestion to invest this Rs. 20000 

I advise you to invest 20000 Rs in proportion of 70:30 in Equity Mutual fund and debt(PPF and EPF)

70% of 20000 i.e. 14000 should be invested in Equity. Out of this equity portion 70% should be invested in good quality Large and Multiple cap Mutual fund. Large-cap comes under Core category. It can generate 10 to 12% returns for SIP investments. These funds provide stability and minimize the downside risk of the market.

Balance 30% of 14000 i.e. approx. 4000 should be invested in good quality Mid and Small cap as satellite portfolio which has the potential to generate 15 to 18% returns. This can add a kick in overall portfolio returns. With this Core and Satellite approach, we can increase portfolio return.

Remaining 6000 can be invested in EPF or PPF as per your wish. Hope you find my suggestion useful !!!

Footnote by DhanWise

Since the question has not mentioned them, this answer has not considered near term goals like buying a car/house or long term goals like saving up for child's education, wedding etc. It also does not incorporate income of your spouse, if any. If these are present, then the asset allocation and SIP amounts would change. Also accumulating emergency funds, term insurance and life insurance is an essential part of the financial planning process. A professional financial planner will create a comprehensive plan after taking into account these additional goals and income.

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Jun 8, 2019


Firstly, it is important to start thinking about long term goals early and it is good that you are starting early. Your habits and commitment to financial discipline has more impact on your long term financial success than products and returns. So as a young person, it is not about finding the perfect product but to consistently push towards your long term goals.

When it comes to retirement planning, you need to calculate how much is needed first. 1.5-2 crores may sound big today, but may not mean much 30 years from now. You need to work out what is the actual amount retirement corpus you need to have, to maintain the lifestyle you want to live in Retirement. It may be a large, daunting number, but it will give you the correct target to achieve. You may see that the Rs. 20,000 today may not be enough to achieve this large goal, but as you grow in career, you may have more surpluses. So starting with what you can now is very important.

As a young person, with many decades of earning potential and time available to achieve your retirement goal, you can afford to take on a little more investment risk. But capacity to take risk is different from your willingness to take on risk. The asset allocation should be based on how comfortable you are with volatility. If you don’t mind seeing large temporary negative returns, you can be overweight on equity. By generalizing, we can say that a 75% equity and 25% debt exposure is ideal for regular monthly investments through SIPs. So you can split your Rs. 20,000 into Rs. 15,000 equity funds and Rs. 5,000 debt funds. When it comes to equity fund selection, it is ideal to invest into a couple of well diversified equity funds, and good quality debt funds.


A family suffers a huge emotional loss and a possible financial loss due to the death of a member. Emotional loss is irreplaceable, but a financial loss could be replaced by life insurance.

When it comes to life insurance cover, one should always consider getting pure Term Insurance over traditional savings/endowment policies. Keeping investments and insurance separate leads to better optimization and control. The right amount over ‘term insurance’ cover is more important than just having some term cover. The amount of cover should be calculated based on who is dependent on you and what is the financial impact to the family if you are not there to earn and provide for the family.

It is meant to replace the income of an earning member and the amount of insurance cover needed is based on that. This insurance need can also change as life events and scenarios require more protection for the family. You can always take a new cover to add to the one you take now.

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Financial Planning for a 30 year old salaried employee

Sachin Shah is a 30 year old Senior Software Engineer, working at an IT services company in Bengaluru. He and his wife want to plan for their retirement and also want to save for their child's education, wedding and for buying a car.

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